Mainfreight hits one-month high; NZX50 drops

Mainfreight’s shares hit a recent high after the global logistics company flagged a solid first half, but that wasn’t enough to keep the benchmark index in positive territory.

Friday, October 21st 2022, 6:00PM

by BusinessDesk

The S&P/NZX 50 index declined 34.86 points, or 0.3%, to 10,797.17.

Across the main board, 43 stocks rose and 84 fell. Turnover was $104.6 million.

Mainfreight climbed as much as 6.2% to $70.11, the highest since Sept 21, after saying it expected first-half revenue to be up by almost a third at $3.01 billion in the 26 weeks to Sept 30, with net profit rising nearly 66% to $301.7 million. It ended the day up 4.5% at $69.00.

Craigs Investment Partners investment adviser Peter McIntyre told BusinessDesk a strong first half was predicted, but Mainfreight’s revenue and profit growth came in well above expectations.

“They continue to surprise with their earnings update,” McIntyre said.

Devon Funds’ head of retail Greg Smith agreed, saying investors had heard a lot of positive news at Mainfreight's investor day today.

Smith said the broader market held up reasonably well, ending the week down by about 0.7%, despite hot inflation figures which came in at a faster pace than expected.

He said investors had more certainty about the UK's political environment with the exit of prime minister Liz Truss. The NZ dollar traded at 50.53 British pence at 3pm in Wellington from 50.50 pence a day earlier.

“That had been hanging over things,” Smith said.

ASB economist Mark Smith summed the news up as “the lettuce wilts, but yields rise anyway” in a note this morning.

He said Truss’s “chaotic” 44 days in office were memorable for all the wrong reasons and a reminder that politicians should think carefully about what they promised.

UK yields and rates briefly dipped, but market expectations were for at least a 75-basis-point Bank of England rate hike next month with the policy rate hitting 5% by mid-2023.

“Propping up shaky bond markets is expensive, with the UK Treasury earlier having transferred £11b (NZ$21.7b) to the Bank of England to cover projected losses,” ASB's Smith said.

Oceania Healthcare led the top 50 lower, falling 3.5% to 84 cents, and travel software provider Serko fell 3.6% to $2.91.

Mainfreight wasn’t the only transport company to enjoy a rally. Move Logistics, which is largely focused on NZ's domestic economy, also rose over 2.6% to $1.15.

In other news on the market today, New Zealand Rural Land Company said it would buy 2,400 hectares of forestry in the central North Island for $63m. It rose 1.9% to $1.07. Rural services firm PGG Wrightson declined 1.49% to $3.98.

Mercury NZ fell 2% to $5.16 after raising its earning guidance by $40m.

My Food Bag rose just under 1.8% to 57c. Ryman Healthcare increased just under 1% to $8.45.

Pushpay Holdings, which generates most of its revenue in US dollars, rose 1.7% to $1.19.

The kiwi dollar traded at 56.63 US cents at 3pm in Wellington, largely unchanged from yesterday’s 56.59c.

Tags: Market Close